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Published on Monday, March 12, 2012

Industry calls for reduced VAT on UK tourism

Industry chiefs are urging the Chancellor to cut VAT on UK tourism to bring it in line with other European countries.

The British Hospitality Association and leaders of the hospitality and visitor attractions industry have written to George Osborne ahead of the Budget, asking for VAT to be reduced to five per cent initially on overnight accommodation and entrance to attractions.

According to EU rules, countries are allowed to support their tourism sector through a reduced rate of VAT.

Currently Slovakia, Lithuania, and Denmark are the only others to charge the full rate while visitors in France and Spain pay seven and eight per cent respectively, compared to 20 per cent in the UK.

Research by Deloitte shows that a cut to five per cent will generate 79,000 jobs and contribute an additional £2.6 billion to the Exchequer over the next decade.

Tourism is the UK’s third largest export industry, bringing in £17.7 billion each year in foreign exchange earnings.  As an industry, it supports over 2.5 million jobs and contributes over £34 billion annually to the UK Exchequer.

Travelodge chief executive Guy Parsons is also calling for MPs to amend the Schengen Visa arrangements arguing that more Chinese people visit France and Germany than the UK because we require them to obtain another visa before coming here.

He said: "Reducing VAT to 5% for tourism businesses and relaxing the Schengen Visa arrangements for Chinese tourists would send a message out that the Government is now firmly on our side."

Graham Wason, chairman of Tourism & VAT: Making Britain Competitive, said: "In a global tourism market, the current VAT rate greatly undermines the UK’s ability to compete effectively." 

Nick Varney, chief executive, of Merlin Entertainments said: "Tourism is the only export industry to pay VAT, and cutting the rate to five per cent will allow us to compete effectively with our international rivals."


By Diane Evans

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